Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — H1 FY2019 Earnings Presentation
52 slides from Flight Centre Travel's earnings presentation, Feb 21, 2019
Slide 1: FY19 Half Year Result
ELIGHT,CENTRE ASX:FLT FY19 HALF YEAR RESULT
Slide 2: Today's Presenters
TODAY’S PRESENTERS For personal use only ADAM DEAN GRAHAM MELANIE CAMPBELL SMITH TURNER WATERS-RYAN Chief Financial Officer President – The Americas Chief Executive Officer Chief Operating Officer 2
Slide 3: Today's Agenda
TODAY’S AGENDA For personal use only RESULTS & HIGHLIGHTS 1 Adam Campbell, Dean Smith SEGMENT RESULTS 2 Graham Turner, Melanie Waters-Ryan, Dean Smith STRATEGY & TRANSFORMATION 3 Melanie Waters-Ryan OUTLOOK 4 Graham Turner 3
Slide 4: Results & Highlights
For personal use only RESULTS & HIGHLIGHTS Adam Campbell Dean Smith 4
Slide 5: Result Overview: Diversity a Strength
RESULT OVERVIEW: DIVERSITY A STRENGTH For personal use only Strong corporate results globally Australian company is now truly global Record contributions from overseas USA and Canada continuing and sustainable performances Disappointing leisure results in Australia 5
Slide 6: Result Overview: Financial Performance
RESULT OVERVIEW: FINANCIAL PERFORMANCE For personal use only Record TTV Exceeded previous sales milestone (FY18 1H) by circa $1b of $11.16b 10% year on year growth Underlying Within the targeted 1H range ($140m-$150m) profit of 1% growth on underlying FY18 result $140.4m Record 60 cents pe
Slide 7: Results Drivers: Corporate Travel
RESULTS DRIVERS: CORPORATE TRAVEL For personal use only Strong growth in Australia and overseas TTV by business type FLT consolidating its position as a top 4 player globally Executing key strategies – FCM “Truly Global”, Corporate Traveller SME domination Ongoing investment in systems and t
Slide 8: Gaining Momentum in World's Largest Markets
GAINING MOMENTUM IN WORLD’S LARGEST MARKETS For personal use only 1H TTV: Corporate now FLT’s Corporate TTV Strong TTV growth major business sector in Contributions trajectory most key markets 4.5 Billions 100% 4.0 90% 80% 21% 3.5 70% 31% 3.0 60% 50% 2.5 40% 2.0 30% 20% 1.5 36% 12% 10% 1.0 0% Americ
Slide 9: A Compelling Corporate Growth Story
A COMPELLING CORPORATE GROWTH STORY For personal use only An organic Tailored for Global growth model customers success Investing in sales and marketing Distinct brands with distinct A proven model that has been and delivering value to offerings designed specifically deployed in 20+ countries
Slide 10: Results Drivers: Material Contribution from International Businesses
RESULTS DRIVERS: MATERIAL CONTRIBUTION FROM INTERNATIONAL BUSINESSES For personal use only Record breaking 1H contribution – 71% increase in Globalisation - Businesses combined profits from overseas leisure and Outside Australia Generated 52% corporate businesses of 1H TTV Strong growth in the A
Slide 11: Americas Now an Earnings & TTV Powerhouse
AMERICAS NOW AN EARNINGS & TTV POWERHOUSE For personal use only Americas businesses generated 23% of FLT’s underlying 1H PBT (PCP: 6%) and 22% of FLT‘s 1H TTV $’m $’b 80 3 70 2.5 60 50 2 40 30 1.5 20 2.46 1 1.93 2.09 10 1.86 1.53 0 0.5 -10 -20 0 FY15 FY16 FY17 FY18 FY19 FY15 1H FY16 1H FY17 1H FY18
Slide 12: Australian Leisure
AUSTRALIAN LEISURE For personal use only Modest TTV increase – growth driven by OTAs, specialist businesses, home-based (Travel Partners) and Travel Money Results Increased same store sales but with smaller network following circa 90 closures during FY18 2H snapshot Disappointing overall profi
Slide 13: Profit & Loss
PROFIT & LOSS For personal use only AUD $'m 1H FY19 1H FY18 Mvmt % TTV Profit (restated AASB15) Record TTV across all Circa $13m difference between Group TTV 11,155 10,154 9.9% geographic segments – largely actual and underlying PBT corporate-driven Olympus impairment ($23.8m) Revenue 1,462 1,
Slide 14: Balance Sheet
BALANCE SHEET For personal use only AUD $'m 1H FY19 1H FY18 Mvmt % 1H Analysis (restated AASB15) Cash & cash equivalents 906 1,011 (10%) Financial assets 186 203 (8%) Assets Liabilities Trade & other receivables 460 442 4% Contract assets 332 287 16% Lower cash balance – reflects Trade payables
Slide 15: Cash Flow
CASH FLOW For personal use only AUD $'m 1H FY19 1H FY18 Mvmt % 1H Analysis Operating activities Operating activities before interest and Operating cash outflow recorded in line with FLT's normal tax (129) (51) 151% seasonality Net interest and tax paid (67) (52) 30% Cash accumulates during peak
Slide 16: Capital Management
CAPITAL MANAGEMENT For personal use only Comprehensive balance sheet review undertaken (as flagged at AGM) in conjunction with independent advisors (Luminis Partners) Surplus capital of $150m identified for distribution to shareholders Range of options considered for returning surplus funds an
Slide 17: Cash Management
CASH MANAGEMENT For personal use only $196m outflow - $93m higher than 1H FY18 1H Operating Retail and Corporate BSP payments increase $81m, mainly due Cash outflow to cut-off timing Tax instalments increased in USA and Canada In the 2018 calendar year, General Cash reduced from $361m to $28
Slide 18: Segment Results
For personal use only SEGMENT RESULTS Graham Turner Dean Smith Melanie Waters-Ryan Adam Campbell 18
Slide 19: Segment Results: ANZ
SEGMENT RESULTS: ANZ For personal use only AUD $'m 1H FY19 1H FY18 Mvmt % TTV Breakdown Business Mix (TTV) (restated AASB15) TTV 5,982 5,891 2% Revenue 747 765 (2%) 10% 2% Other income 4 7 (52%) 25% Expenses (677) (668) 1% PBT pre royalty 74 104 (29%) 73% PBT (underlying)1 73 106 (31%) 90% Total sta
Slide 20: 1H Trading Overview: ANZ
1H TRADING OVERVIEW: ANZ For personal use only ACHIEVEMENTS & RESULTS DRIVERS Record TTV Disappointing profit results in Flight Centre brand – costs, gross margin decrease, soft 2% growth to circa $6b TTV results Solid growth in NZ Investment in new staff (upstaffing) yet to Record TTV in
Slide 21: Segment Results: EMEA
SEGMENT RESULTS: EMEA For personal use only AUD $'m 1H FY19 1H FY18 Mvmt % TTV Breakdown Business Mix (TTV) (restated AASB15) TTV 1,595 1,421 12% Revenue 211 194 9% 4% 4% Other income 6 4 29% 19% 40% Share of JVs / associates 1 - 100% Expenses (179) (163) 10% 9% 56% 68% PBT pre royalty 39 35 13% Tot
Slide 22: 1H Trading Overview: EMEA
1H TRADING OVERVIEW: EMEA For personal use only ACHIEVEMENTS & RESULTS DRIVERS Record TTV & Profit Ireland businesses now breakeven – corporate profit offsetting modest leisure TTV up 12% to $1.6b – circa 15% of group losses TTV Investment in Record results in all countries, apart from Nordics
Slide 23: Segment Results: Americas
SEGMENT RESULTS: AMERICAS For personal use only AUD $'m 1H FY19 1H FY18 Mvmt % TTV Breakdown Business Mix (TTV) (restated AASB15) TTV 2,456 2,088 18% Total revenue 291 247 17% 1% 8% Other income 6 4 66% 30% Share of JVs / associates (1) (1) (46%) 37% Expenses (264) (242) 9% 69% 55% PBT 33 8 292% Tot
Slide 24: 1H Trading Overview: Americas
1H TRADING OVERVIEW: AMERICAS For personal use only ACHIEVEMENTS & RESULTS DRIVERS Record TTV & Profit Canada TTV up 18% to almost $2.5b 9% TTV growth 23% USA growth – all organic PBT up 34% to $9m Circa 300% profit growth across segment Improvement across 3 key divisions – corporate, le
Slide 25: Strong Future Prospects: Americas
STRONG FUTURE PROSPECTS: AMERICAS For personal use only SUCCESS DRIVERS Compelling offering for Workforce Planning and corporate customers – strong Network sales team winning new accounts and helping to retain Growth in new models – clients independent performing well (250+ independent agents
Slide 26: Segment Results: Asia
SEGMENT RESULTS: ASIA For personal use only AUD $'m 1H FY19 1H FY18 Mvmt % TTV Breakdown Business Mix (TTV) (restated AASB15) TTV 885 637 39% Revenue 46 44 5% Other income 1 - 100% 16% 12% Expenses (43) (43) - 34% 18% PBT 4 1 277% 66% 54% Total staff 1,794 1,974 (9%) TTV / total staff ($'000) 493 32
Slide 27: 1H Trading Overview: Asia
1H TRADING OVERVIEW: ASIA For personal use only ACHIEVEMENTS & RESULTS DRIVERS Record TTV & Profit Rest of Asia TTV up almost 40% across the region – India Benefiting from corporate focus, following up 59% leisure rationalisation during FY18 All countries profitable Profit increase from smal
Slide 28: Other Segment
OTHER SEGMENT For personal use only AUD $'m 1H FY19 1H FY18 Mvmt % Segment Structure DMCs (restated AASB15) Includes FLT’s Global areas, Building and diversifying the along with Travel Experiences Buffalo business in Asia TTV 238 117 104% Network (TEN) businesses Investment in B2B sales, new
Slide 29: Bedding Down Hotel Expansion
BEDDING DOWN HOTEL EXPANSION For personal use only Through BHMA, FLT has signed a 10-year lease agreement for the four-star Camakila Resort in Bali 29
Slide 30: Strategy & Transformation
For personal use only STRATEGY & TRANSFORMATION Melanie Waters-Ryan 30
Slide 31: A Strong History of Growth
For personal use only A STRONG HISTORY OF GROWTH 25b 10,000 Global force in travel Top four global TMC 20b 7,500 Top leisure travel company – market 15b leader in Australia, 5,000 NZ and South Africa 10b Leisure / Corporate businesses in 22 2,500 5b countries Total Corporate - - presence i
Slide 32: FLT's Core Businesses
corporate FLT’S CORE BUSINESSES leisure travel experience network ASX:FLT FY19 HALF YEAR RESULT OUR PURPOSE TO OPEN UP THE WORLD FOR THOSE WHO WANT TO SEE FLIGHT, CENTRE Fr rravel GROUP 32
Slide 33: Transformation Phases
ASX:FLT FY19 HALF YEAR RESULT a change company FEBatedite(an ies YEARS 4-5 II SUSTAIN & DOMINATE: 7% compounding Market leading business annual TTV growth a models and brands an underlying* cost INVEST & FDG . margin of less than 10% Business engineering across three core pillars REDUCE & FOCUS: Cle
Slide 34: Transformation Themes
TRANSFORMATION THEMES For personal use only 1. 2. 3. 4. 5. 6. 7. Digital Invest in Globalise Globalise Control Globalise Aligned Commerce Growth Land Air Costs & IT Acquisition Growth Brands & Improve Strategy Business Efficiency Models 34
Slide 35: Years 2-3 Transformation Objectives
YEARS 2-3 TRANSFORMATION OBJECTIVES For personal use only Brands Famous and distinctive brands Corporate Leisure At Destination Quality and consistent customer experience Models Productivity and efficiency Scalable growth – sustainable revenue and cost 35
Slide 36: FLT Corporate
FLT CORPORATE For personal use only Brand Model Key strategies Organic Growth - Super investment in Sales and Marketing TMC / One FCM - Standardising and Globalising Global Investing in Platforms Sales Excellence SME / Investment in Technology and digitisation Local Product Development
Slide 37: Corporate Transformation Initiatives
CORPORATE TRANSFORMATION INITIATIVES For personal use only 1 Globalising key functions for increased capability and reduced cost eg. Global Implementation Centre of Excellence 2 Digital and technical investment 3 Financial solutions eg. integrated expense management and payment options 4 Expansion o
Slide 38: Corporate Technology
CORPORATE TECHNOLOGY For personal use only x 38
Slide 39: FLT Leisure
FLT LEISURE For personal use only Mass Premium Youth Market leader Specialist UK AU Growth in new models Unmanaged small business FCBT USA NZ Vertical expansion Vertical niche CAN RSA Digitisation ASIA Digitisation 39
Slide 40: Leisure Transformation Initiatives
LEISURE TRANSFORMATION INITIATIVES For personal use only Membership - Personalised offers, closed Sales Technologies - Lead generation, lead user group rates management, CRM Products & Pricing - New use of data for Modern Marketing - Automation, data for FCB 2.0 pricing and packaging of offe
Slide 41: Leisure Technology: Umapped Powering Trip Management
LEISURE TECHNOLOGY: UMAPPED POWERING TRIP MANAGEMENT For personal use only 41
Slide 42: Travel Experience Network
TRAVEL EXPERIENCE NETWORK For personal use only Touring Destination Management Hotels Digitisation Global brand Product pivot Product development Global platform Pipeline Social engagement Global sales team 42
Slide 43: Product Transformation Initiatives
PRODUCT TRANSFORMATION INITIATIVES For personal use only 1 Globalisation of procurement and distribution 2 Vertical integration beyond vertical expansion 3 Air product and distribution (NDC) 4 Pricing and yield management – globally powered, locally deployed 43
Slide 44: Outlook
For personal use only OUTLOOK Graham Turner 44
Slide 45: FY19 Guidance
FY19 GUIDANCE For personal use only Currently tracking towards bottom of targeted range (underlying PBT between $390m - $420m) Ongoing volatility in Australian Leisure business early in 2H ahead of busiest trading months Continuing to monitor volatility in Australia along with overseas growth to ass
Slide 46: Outlook
OUTLOOK For personal use only Overseas Corporate businesses Australia Good pipeline of account Continued improvement New plans in place to wins expected improve leisure results in Already strong division Solid trajectory in key short term bolstered by recent countries and sectors Complem
Slide 47: Australian Leisure Improvement Strategies
AUSTRALIAN LEISURE IMPROVEMENT STRATEGIES For personal use only ADDRESSING THE CHALLENGES Growth Costs Expansion in growth models Ongoing focus on reducing and sectors head office overheads Specialist businesses Offshoring, outsourcing, robotics Online / home-based / flash sale Productivit
Slide 48: Appendices
For personal use only APPENDICES 48
Slide 49: Five-Year Result Summary
FIVE-YEAR RESULT SUMMARY For personal use only December December December December December 2018 2017 2016 2015 2014 (restated AASB15) TTV $11,155m $10,154m $9,343m $9,182m $8,138m Revenue margin 13.1% 13.4% 14.0% 13.7% 13.6% EBITDA $167.3m $177.5m $143.8m $188.0m $164.0m PBT $127.4m $139.4m $109.2m
Slide 50: FLT's Top Global Brands by TTV
FLT’S TOP 10 GLOBAL BRANDS BY TTV For personal use only 1. Flight Centre (Leisure) 2. FCM Travel Solutions (Corporate) 1 3. Corporate Traveller (Corporate) 4. Travel Money (FX) 5. Travel Associates (Leisure) 6. India (FX) 2 7. Liberty (Leisure) 8. BYOjet/Aunt Betty (Leisure – online travel agency) 9
Slide 51: Results by Country / Region
RESULTS BY COUNTRY / REGION For personal use only CANADA UK REST OF EUROPE1 GREATER CHINA TTV: $740m, up 9% in TTV: $1.1b, up 14% in TTV: $143m, up 6% TTV: $158m, up 12% in AUD (up 6% in lc) AUD (up 8% in lc) in AUD AUD (up 4% in lc) AUD EBIT: $10.4m AUD EBIT: $26.9m AUD EBIT: $0.2m AUD EBIT: $1.8m
Slide 52: Our CSR Program: Sharing Our Progress
OUR CSR PROGRAM: SHARING OUR PROGRESS For personal use only 10 years of community Customer education via Establishing Active waste reduction giving in Australia 5 Tips to Responsible Reconciliation Action program – eliminated equalling $12.5m travel – ambassadors Plan working group 20,000 si
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